Even more candor from the National Association of Realtors

I thought I’d never see the day when the NAR economist wrote something like this

Based on the latest available information, my outlook is for new single-family home construction to decline for another year-and-a-half through the second quarter of 2009.

However, lower home construction activity is just what is needed to help stabilize the housing market.  Abundant inventory is not what we want.  A high number of vacant new homes will pressure home prices on existing homes to fall and that could result in a sizable loss in housing equity for a vast portion of 75 million homeowners in the U.S.  Consumer spending can spiral downward fast from loss in equity and push the economy into a deep recession.  So the only way to halt this scenario is for the inventory to be reduced. 

It’s not a pretty forecast, it’s not overtly sunshine-y, but it appears to be an honest assessment, and that’s just what we all need.

If Mr. Yun keeps this up, one day people might get used to candid analysis from NAR – and then what would we write about?

The RSS feed for the economic commentaries is here.

One question – how many consumers are even aware of the NAR’s history of ahem – BS – analyses?

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  1. Scott Brunner February 20, 2008 at 22:34

    I keep telling y’all, Yun is the real deal….

  2. Blue Ridge Mountain Real Estate February 21, 2008 at 07:27

    Hmmmmm….. So what are the developers supose to do. They did nothing to deserve this current dilema. We have so many homeless people in the US and people who want homes lets temporary house these people and move on. Slowly release the homes back into the market.

    I also think if were gonna for the developers to do anything it is to go “green”. We are simply in denial if we don’t start green practices.

    I to appreciate the candar and hope to hear more from NAR in future.

  3. Jim Duncan February 21, 2008 at 10:20

    They did nothing to deserve this current dilema

    Sure they did – they overbuilt. They didn’t anticipate the rapidity and severity of the market shift (not too many did).

  4. Jim Duncan February 21, 2008 at 14:16

    This is from an email exchange with one of the folks at
    Calculated Risk, referencing
    this post about Mr. Yun (posted with permission). –

    “‘As with NAR, the OFHEO price index also essentially computes price changes by placing equal weights on all homes. All homes are treated equally.'”

    NAR prices are based on the median price (as Yun notes earlier), the OFHEO price index is a repeat sales index like Case-Shiller. The difference in weighting (between OFHEO and Case-Shiller) isn’t based on price – as Yun suggests – but based on the time between sales. There are also other differences between OFHEO and Case-Shiller.

    I’ve chatted with the OFHEO economist Yun mentions, Andrew Leventis, and I think Yun misunderstands his research (BTW, I’ve also exchanged emails with Wessel at the WSJ on this topic before he wrote that article).”


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